The world of cryptocurrencies has changed tremendously over the years, but it always seems to follow a specific trend. Bitcoin is still pretty strong, even after fluctuating so much each year. Other cryptocurrencies have grown a lot while some have completely collapsed.
But all of this sounds like too much for a beginner in this job. After all, it’s not as simple as calling it Bitcoin, and that’s it. Technology has advanced quicker than anyone could have predicted and now you’ve got cryptocurrencies for everything (from gaming to your average-joe cryptocurrency).
Today, we’ll be giving you 7 simple tips to understand Cryptocurrency market data better. This is necessary to feel what happens and how to utilize it truly. You could check some trinity debt reviews as well to get more info on this topic.
In any case, let’s begin, shall we?
Understand the relation between circulating supply and market cap
When you are in the crypto business, you must know the relation between the circulating supply and the market cap. On its own, circulating supply is not that important but it is required to calculate the market cap. It is the best approximation of the total number of coins are there in the general public’s hand.
Market cap is the approximation of the total number of coins that can ever exist in the lifetime of the cryptocurrency.
Circulating supply = the number of coins mined and existing in hand
Market cap = Circulating supply × price of a coin
So, now you have a thorough idea of what is the relation between circulating supply and market cap. Together, these two are very important factors to track for better understanding of the crypto market.
Keep up to date with current market situations
The market can change in an instant, and if you’re not prepared for these fluctuations, you might end up in big trouble. The Cryptocurrency market has a habit of making drastic jumps or falls whenever. One day, a Crypto’s value could be $1,000 and the other $200. It all depends on many factors which, of course, you need to be on top of.
So, do your research every single day. Try to follow the trends as closely as possible and really get into the skin of it so you can figure out when said changes might occur. This is in your best interest and can literally make or break you.
The Candlestick price chart
The candlestick price chart is definitely the favorite type of chart among traders. This method of displaying market information works great because of how much you can learn from it. Each ‘candle’ tells a rich story; the opening price, and the lowest/highest prices for a given time period. The closing price is also present.
The color of the candles also matters; green signifies a closing price higher than the opening price, while red is the opposite.
Lastly, you can probably understand how big of a price spread is involved for the given time frame (wide or narrow). A very useful tool to have as a crypto trader!
Understand which factors influence pricing
As mentioned before, pricing for crypto’s can change drastically and can surprise even the best traders. The truth is, you need to have an understanding of what can influence pricing. For starters, here are some of the largest influencers on pricing that you can encounter: ETF certificates, various types of regulations, hash mining, and many others.
Technical analysis of these factors isn’t quite useful, so skilled traders combine that with fundamentals analysis to gain a clearer picture.
Bitcoin price index or chart
You can find this info by using the same exchange you bought it from. Most of these exchanges offer such services (it’d be surprising if they didn’t), so you won’t have to search long for it. Alternatively, check the Coindesk Bitcoin Price Index. This is also useful for finding how Bitcoin is faring at the moment.
Research individual coins and tokens
It’s not a good idea to research stuff en masse. The cryptocurrency market revolves around individual cost for coins and tokens. The cost depends on a plethora of factors (some of which we listed previously). When you decide to research the market, start looking at smaller coins and tokens too.
Some of these are on an upward climb and will steadily keep increasing in value. But still, have an understanding of the major players as well.
Prepare for volatility
If you aren’t ready to experience massive changes in value for almost all of the cryptocurrencies in the world, this job might not be for you. ‘Chaos is a ladder’ couldn’t have been truer than here. Traders that thrive know that sometimes you must fall to climb back up again, even higher than before.
However, keep your alert levels high and don’t miss too much stuff; it’ll come back to haunt you! Follow these seven steps and keep your eyes open. Take a good record of data and follow the market trend. If you start with these above-mentioned tips, you will be successful in this crypto world.
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